Download 2013 Annual Issuance Plan for Inscribed Stock and Treasury Bills

DEPARTMENT OF TREASURY
Financial Management Division
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EMAIL:
WEBSITE:
(675) 312 8741
(675) 312 8808
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VULUPINDI HAUS, Level 2
P.O BOX 542, WAIGANI
PAPUA NEW GUINEA
2013 Annual Issuance Plan for Inscribed Stock and Treasury Bills of the
Independent State of Papua New Guinea
Monday 7th January 2013
The Government of the Independent State of Papua New Guinea announced on November
13 2012 its 2013 National Budget. The Medium Term Debt Strategy 2013-2017 (the Debt
Strategy) was updated, and the three existing strategies were reaffirmed:
1. Maintain Government Debt at sustainable levels.

Government Debt as a proportion of GDP is projected to increase from 26.1% by
end 2012 to 32.0% at the end of 2013. The Fiscal Responsibility Act 2006 (as
amended) increased the prohibited level of General Government debt from 30.0
per cent to 32.0 per cent. The level was increased due to the Government’s
development agenda. Certain other elements of the Debt Strategy may need to be
temporarily exceeded in order to achieve the financing amount required.

PNG has set itself a target of BBB rating. A BBB rating means the Rating Agencies
consider PNG as having adequate ability to meet its financial obligations. PNG’s
current sovereign credit rating is B plus with a Stable outlook from Standard and
Poor (S&P).
2. Reducing the excessive financial risks in the debt portfolio by:

Maintaining foreign currency debt at around 40% of the total Central
Government debt portfolio by restricting the amount of new foreign currency
loans it enters into.

Reducing the amount of short-term, variable rate debt (Treasury Bills) from the
current level of about 43% of domestic debt to 39% by 2013.
3. Gradually making improvements to the domestic debt market

Treasury will set up a Domestic Bond Market Development Committee to
oversee the continued development of PNG’s bond market.

Treasury will also start work on the necessary prerequisites to establishing a
formal Government secondary market.
Summary of 2013 Debt Issuance Plan
Set out below is an outline of the debt issuance plan for 2013. Further details on the
strategy and issuance plan are shown in Chapter 12 and Appendix 3 (Table(s) 9, 10 and 12)
of Volume 1 of the 2013 National Budget Papers. This information is available on the
website:
http://www.treasury.gov.pg/html/national_budget/national_budget.html
Summary of Repayments and New Issuance during 2013
In Millions of Kina
Balance
31/12/12
Repayment
2013
New
Issuance
2013
Projected
Balance
31/12/13
Treasury Bills
2,536.9
3,216.3
3,511.5
2,832.1
295.2
Inscribed Stock
Other Domestic
Debt
3,367.0
138.3
816.0
4,044.7
677.7
-
-
1,405.0
1.405.0
1,405.0
FX Debt
2,610.5
168.8
644.7
3,086.4
475.9
Total Government
Debt
8,514.4
GDP
Debt as % of GDP
3,523.4
6,377.2
11,368.2
32,666.1
35,571.4
26.1
32.0
Net
Change
2013
2,853.8
Treasury Bills
Treasury Bills will continue to be auctioned on Wednesdays, and settled three days later on
the Friday. Department of Treasury determines the amount of Treasury Bills required to
ensure there are sufficient cash balances in the Government’s bank account so as to pay the
Government’s expenses that are due. Bank of Papua New Guinea in its role as the debt
management issuing agent of the Department of Treasury will announce to investors by
close of business on Tuesdays the amount and type of Treasury Bills to be sold. The
Government will continue to issue mainly 6 month and 12 month Treasury Bills.
Inscribed Stock
Inscribed Stock will be auctioned on the third Tuesday of each month and settled three days
later on the Friday. The Government will offer K80 million per month from January to
August, K45.5 million in September and K43.5 million from October through to December
2013. Bank of Papua New Guinea, in its role as the debt management issuing agent of the
Department of Treasury, will announce to investors during the first week of each month the
amount of each Inscribed Stock series to be auctioned (each series has a specific maturity
and coupon). Refer to the issuance calendar below for more information.
2013 Issuance Calendar – Inscribed Stock
Issue Date
Amount on Offer
Tue, January 15, 2013
K80.0 million
Tue, February 19, 2013
K80.0 million
Tue, March 19, 2013
K80.0 million
Tue, April 16, 2013
K80.0 million
Tue, May 21, 2013
K80.0 million
Tue, June 18, 2013
K80.0 million
Tue, July 16, 2013
K80.0 million
Tue, August 20, 2013
K80.0 million
Tue, September 17, 2013
K45.5 million
Tue, October 15, 2013
K43.5 million
Tue, November 19, 2013
K43.5 million
Tue, December 17, 2013
K43.5 million
Total Issuance
K816.0 million
Maturities & Coupon Rates
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
To be announced at the beginning of each month
Other domestic loans
The 2013 National Budget is a deficit budget, with a large financing task required.
Depending entirely on traditional methods of financing that is Treasury Bills and Inscribed
Stock, might not successfully achieve the funding requirements hence new methods of
issuance or products are required.
Consequently the borrowing of K1, 405.0 million will comprise not only of domestic debt,
but may comprise external debt as well. One option is a possible US Dollar denominated
bond issuance.
Updates of the debt issuance plan
The above issuance plan is based on projections in the 2013 Budget, and if there are any
changes they will be made as part of a Supplementary Budget in 2013. Also note that the
above issuance plan amount on offer is subject to change for each month and investors will
be notified accordingly if changes are made on amount offered per month.
By the beginning of each quarter Treasury will announce:


The likely amount of Treasury Bills that mature over the next three months and the
likely amount of Treasury Bills to be auctioned
The series (maturity and coupon) of Inscribed Stock to be auctioned over the next
three months
Additional information
Further information on the historical results of auctions is available on the Public Debt
folder of the Department of Treasury’s website: www.treasury.gov.pg. If you have any
questions please contact the Securities Execution Branch on telephone numbers:
312 8715, 343 5222 or 343 7190.
Major Activities for first six months of 2013

By the beginning of February 2013 Treasury will seek formal feedback from major
investors and provide them with a summary of the Government’s debt management
activities for 2013. Treasury will develop and distribute to investors a summary of
the feedback received, and the major activities that Treasury and BPNG will
undertake in the second half of 2013.

Treasury will set up the Domestic Bond Market Development Committee
JOHN A. UWARE
First Assistant Secretary